It took us five long months, but we have gone through our first crisis since the company existed. Since we created our company in 2008, we never looked back and always continued our growth at a very high speed. This was even more impressive since both my partner and I never really worked more than 10 hours a week each on our sites. Still, we were able to go from annual revenues of 18K to a low 6 figure company within 3 years. Since then, we never made under $100,000 of gross income. Not bad for a hobby!

But things went sour in 2012… very sour…

What Happened in 2012?!?

This is exactly the question I asked myself several times. I could have found several lame excuses such as….

#1 My partner had his first kid

#2 I had my third one!

#3 We were busy replacing 1 VA and working on our Dividend book

But the truth is harder than that:

#1 We didn’t work very hard on creating anything different

#2 We became complacent and looked at all the money that was coming in

#3 We knew our business model wasn’t sustainable and closed our eyes and kept hoping it will last

At the beginning of 2012, there was a huge Google PR slap. Several financial blogs saw their Page Ranks dropped to 0 and Google severely penalized private advertisements. We not only saw this part of our business melt away faster than a green army man in the microwave but we also got targeted by some jealous individuals who tried to harm our sites.

We did work on our business model and tried to make modifications but this wasn’t enough. While we were making as much as the previous year, Google came back again to hit some of our sites with their EMD update. This is where the storm truly started. A hot air balloon full of shit hit the Fan!

For several months, we kept our expenses as is and continued to spend money on various projects. We kept our growth minded business mentality combined with an aggressive debt repayment program. Everything was going well until the tax guy knocked on our door. We knew we had to pay taxes this year as we were quite profitable, we just completely forget to budget it! Taxes + accounting fees + Fincon12 all in the same month. There was just not enough money left in the company to pay for everything.

How We Reacted

At the beginning of 2012, we simply thought “aahhhh we knew it was coming…”. We thought that by continuing our business as is and keep working, we were going to go back to normal within 6 months. Then came the attack to our sites and reputation and we took it more seriously. This is when we started to build a plan to get out of this predicament.

#1 Diversification

A good thing about our previous business model is that no site was generating over 30% of our income by itself. We were already diversified in terms of income producing sites. We can say that roughly 6-7 sites generate 80% of our revenues. Therefore, we have several playgrounds to work with.

The problem is that the business model was quite similar as we had developed an important private advertiser network. This is when we started to think about revenue source diversification. We were already working on a book and we also started to monetize our newsletter. In July, we made over $2,000 with a single campaign.

Most recently, we have decided to leave a few projects on the shelf and concentrate on what we have. It has become harder to do well everywhere so we had to concentrate on a few niches.

#3 Optimization

I’ve performed so much Adsense optimization that I was penalized by Google! Back in September 2012, we were able to grow our Adsense income to over $4,000 for the first time. Keep in mind that January and February 2012 were showing $2,042 & $2,505. You can appreciate the huge improvement we made in only 7 months! The problem is that Google didn’t see it that way and penalized some of our sites by deranking 70% of the search engine traffic we used to get on some websites. Those websites were obviously our biggest Adense earners. And this is how went down from $4,151 in September to $2,838 the following month. Since then, I’m back to hovering between $2,500 and $3,000 (besides a few peaks due to important mentions).

#4 Spending Cuts

I shared with you that we are on an aggressive debt repayment plan since the beginning of 2012. We want to clear our corporate debt within the next three years and then be able to truly enjoy the benefits. In order to continue our debt repayment plan the way we planned it, we decided to cut our expenses.

We realized that we were overspending for the sake of growth. Like a bigger company, when times are good and money is flowing in, we started to spend more than we need to. We were creating content in places that don’t drive traffic and don’t generate income for now. This is silly. This is why we started to cut out expenses and save another $600/month. Our cost structure has now dropped below $4,000. We are now at $3,855 excluding debt repayment. The plan is to repay $3,000 per month.

Where Are We At Now?

2012 was a crazy ride. We worked harder than ever and didn’t generate any growth. That’s normal because our previous business model that was based on private advertising dropped so much that we had to find other ways to make money. It’s not that simple! Nonetheless, with all our efforts, we only suffered a drop of 5% of our gross income. So we are still showing over $100,000 in gross income and this now come from several different sources.

The other big difference is that we are now generating money from our own products. We have small ebooks generating between $200 and $300 per month along with our “flagship” product; Dividend Growth generating another $250-$300 per month on a steady basis. I think that selling our own products will definitely help us reaching a steady cash flow each month instead of hoping for a big deal.

What 2013 Will Look Like?

2013 will be the continuity of 2012. This means that we are still working on evolving our business model. The biggest moves have been completed last year but we have now to tweak our modifications. We are trying different avenues and definitely affiliate products and our own services will be great addition.

I think we wasted too much time and energy focusing on Adsense last year. Adsense is great as it’s highly passive but the problem is that you have no control over it. Plus, Google has this weird habit of penalizing people for nothing. So we will keep Adsense in our revenue streams but we won’t focus on it anymore. I think that a good base of $3,000 per month is sufficient to help us grow with our other sources of income.

Our membership program will probably be the biggest challenge we will face. But after the success we had with our latest book, I think we are up for the challenge!

Comments

Given that most of your sites are within the personal finance niche, have you consider running your own ad network? And by ad network, I don’t mean the type you describe above, at least as I understand how you are monetizing it by the value of a link. Instead I am talking about running an ad server that rotates ads among your sites (and possibly for other bloggers in your “network”). It could be PPC or CPA type ads.

I did this last year for some sites in a specific fitness/diet niche where I was able to aggregate about 3,000,000 page views per month. It did much better than Adsense, for both me the owner of the network and my publisher friends.

A 5% revenue hit is a win! I don’t see anything really that bad at all given you mentioned a number of your sites got hit. When you say you “own” your sites now, does that mean you own 100% now and have no partner?

this is a very good idea. The market is saturated by big marketing firm aiming at financials since they have huge budget to spend. I was able to run a few campaigns in the past but it was because I had a great contact inside one of those firms.

@Sam,

Oh! I didn’t see it that way! No I still have my partner and we are still 50/50. I now “own” my company in a sense that I feel in total control. Back in 2011, beginning of 2012, I was simply surfing on the good money without really thinking about how bad it could go. 2012 brought me back down to earth!

Another storm is coming fyi. A Panda update is this Fri or next Monday and there will be a huge Penguin update before the summer.

Showing flat YoY revenue growth in 2012 after all those changes really is a win in my book. I’ve read plenty of folks get hit by 20-90%. There are no more monthly income updates by some b/c it’s too painful now.

Can you breakdown your $3,855/month is expenses? That still seems high no?

I’ve cleaned up my site and reworked a lot of posts to make them more informative. The average length per post has grown by 100% to about 1,500 words as well. We’ll see how it goes, but so far I can continue to eat ramen noodles every day!

BTW, forgot to ask you on taxes. Are taxes not paid quarterly like they are in the US? How does one “run out of money to pay taxes” given in order to pay taxes, you’ve got to make money to pay those taxes?

hopefully this next Panda update will increase my search engine traffic :-). I’ve been hit in the past and recovered during the next update so it’s good news if there is one update this weekend! thx for the info!

I’ll keep your question regarding our expenses in mind, it’s been a while since I haven’t detailed my expenses. I’ll write a post about it!

In regards to taxes, we have the option to pay quarterly but for small business, you can simply keep you cash the whole year and pay 1% penality/month on the amount you owe. Since I owe much, I rather benefit from my cashflow throughout the year.

Fascinating review and way to listen and take action on your wake up call. Would you suggest blogs not focus on advertising as an income stream anymore and focus on producing products or going the affiliate route? Have a great 2013!

I’m 100% with producing your own product. I think this is the only way you can control your blog and make money for sure:
#1 create a newsletter so you don’t depend on Google for traffic
#2 create your own product so you don’t depend on advertiser for money!